U.S. securities regulators have adopted new rules that require broker dealers to search for missing shareholders, with whom they’ve lost contact.
The U.S. Securities and Exchange Commission (SEC) unanimously approved new rules Friday that will mandate that broker-dealers conduct searches for holders of securities they’ve lost touch with; and requiring that they notify people who have not processed cheques they have received in connection with their securities holdings.
“For the first time, broker-dealers will have a duty to reach out and find those they have lost touch with. It’s a straightforward rule with a common-sense objective,” said SEC chairman, Elisse Walter. “Among other things, it will make it more likely that investors will get the money that they may not have realized is owed to them.”
Current rules only require recordkeeping transfer agents to “exercise reasonable care” to ascertain the correct addresses of ‘lost securityholders’ and conduct certain database searches for them.
The SEC says that a loss of contact can be harmful to holders of securities because they no longer receive corporate communications or the interest and dividend payments to which they may be entitled, and are often placed at risk of being deemed abandoned.
The amendments will become effective 60 days after the date of publication of the release in the Federal Register, and the compliance date will be one year from its publication.